Amazon to meet the Amazon, starts selling directly to Brazilian consumers

Contxto – Well, it was about time.

Seattle’s e-commerce giant, Amazon, is finally stepping up its Latin American game. Last January, the company launched a Brazilian chapter, now selling directly to consumers.

Why do I mean by directly? Well, Amazon was present in the country since 2012, but only as a peer-to-peer trading platform – a marketplace, just like eBay or Mercadolibre.

It was selling books, kindles and movies directly to consumers, but not other than that. Now the company will be able to sell anything from disposable L’Oreal items to Black & Decker products, toys and clothing. Users will be able to purchase products from 800 different suppliers in 11 categories.

Only in January, after the website launched, the company sold over 120 thousand units of a wide variety of products.

Amazon has been delighting customers since we started selling books in Brazil several years ago, and today marks an important milestone for us. We’re excited to greatly expand selection for Brazilian customers.

Alex Spiro, Head of Amazon Brazil

The company is already smoothing out the ground and it’s making alliances with important Brazilian players in order to better run operations and satisfy the demand of products. They’ve already talked to some national airlines, and they’re also starting a pilot program with Brazilian startup CargoX, who might be in charge of product delivery.

The company has already established a warehouse in Sao Paulo back in February 2018, but wasn’t able to start operations due to some logistical problems.

Bumpy road

The company had some fiscal and logistical complications that delayed their start of operations.

According to a BTG Pactual analyst, the company although providing a P2P marketplace for users, it didn’t really feel comfortable not giving its 100 percent – full services to the people of Brazil.

Nonetheless, Brazil is a hard country to operate in as a foreign entity. Complex tax structures that change from state to state and bumpy roadways are some issues companies need to deal with in Brazil on a daily basis.

Payments are part of the complications since many companies offer payment alternatives that benefit users rather than companies, allowing them to purchase goods and paying them later. Boleto – as Brazilians call it – is a way for users to pay in physical spots, such as post offices or bank branches instead of online, even after the purchase. Amazon Brazil will offer that alternative.

Untapped potential

Although complications and barriers of entry are higher than normal for foreign tech companies entering Brazil, the market potential is huge. If they manage – or better said, when they manage to comply with every single requirement and figure out the best practices to operate in the country, they’ll certainly find a gold mine to exploit.

Just so you know, the Brazilian e-commerce market was worth over US$27 billion in 2018, expecting to grow to US$38.5 billion in only three years.

Now, Amazon is not the only greedy tech giant in the story. Taking advantage of Amazon’s lag in the portuguese-speaking country, Google positioned itself as a contender by talking to local retailers about Amazon’s plans, and getting ahead of the game. Not really sure what they’re up to, but we’ll find out.

Alibaba is also silently entering the market, for last year the company made a US$100 million investment in Brazilian unicorn, Stone Pagamentos, through their venture-arm, Ant Financial.

Final thoughts

Not going to lie. I’m a little bit nervous about the amount of power the company might be able to get out of Brazil, which is one of Latin America’s largest populations, as well as a very internet-active region. Not to mention its long-term affiliation for online commerce.

But as many of you may know, execution is king, and we’ve seen some big names unable to enter certain markets – *cough* Walmart *cough* Uber *cough.

So let’s stay vigilant.

-VC